4 minute read time
December 4, 2020

Executive Summary

  • The U.S. added 245,000 jobs in November vs. expectations of 440,000.
  • The unemployment rate fell by 20 basis points (bps) to 6.7%, while the labor participation rate also fell by 20 basis points to 61.5%.
  • Hiring was positive in all sectors except for government and retail. Temporary employment for the census ended for 93,000 workers, accounting for most of the jobs lost in the government sector. November’s retail figure indicates less seasonal hiring this year.
  • The economic recovery remains on track but is expected to slow markedly in Q4 amid rising COVID infections and the absence of additional federal aid.
  • CBRE expects economic growth will accelerate again in 2021, underpinned by a widely available COVID vaccine in H1 and additional federal fiscal support. Property markets, particularly office, retail and hotels, will lag the broader recovery.

Commercial Real Estate Highlights

  • Office: Employment in office-using sectors increased by 75,000 jobs in November. Professional & business services added 60,000 and financial activities gained 15,000. While recovery in these sectors continues, CBRE does not expect a noticeable recovery of the office market to begin until a vaccine is widely available in H1 2021 and restores confidence in reoccupying office space.
  • Industrial: Warehousing & storage added 36,800 jobs in November, while manufacturing gained 27,000. Strong growth in the transportation and warehousing sector (+145,000 jobs) is an indicator of increased e-commerce sales during the pandemic. This has bolstered demand for industrial & logistics properties and we expect this trend to continue.
  • Retail: Traditional retail sectors lost 34,700 jobs at a time of year when seasonal hiring usually increases. Food services & drinking places also lost 17,400 jobs. Most of these losses were the result of increased restrictions on retail establishments as COVID infections surged across the country.
  • Construction: The construction industry gained 27,000 jobs in November. Job growth was up in both residential and nonresidential categories, supported by ultra-low interest rates. Demand for suburban single-family homes remains a bright spot in the U.S. economy.
  • Health Care: Health care added 46,000 jobs in November. Ambulatory health care services, which include doctors’ offices, outpatient care, laboratories and home health, gained 51,700 jobs. Hospitals gained 4,700, while nursing & residential care facilities lost 10,400.
  • Multifamily: The continued recovery of the labor market supports multifamily fundamentals. Still, there will be headwinds as long as the pandemic constrains economic growth. Over the near term, the multifamily sector faces risks from federal efforts to prevent evictions and from less generous unemployment benefits. Additional federal aid would help renters affected by the pandemic to continue making rent payments. Demand in high-density urban markets will remain subdued until a vaccine is widely deployed.
  • Hotels: The hotel sector remains hard-hit by the pandemic. Accommodation services gained just 5,500 jobs in November. CBRE expects that overall hotel demand will not fully recover until 2024, though certain subsectors, such as “drive-to” locations, will see faster recovery.

The Bottom Line

November’s jobs report was below market expectations but in line with our view of a slowing economic recovery. CBRE expects Q4 GDP growth to decelerate sharply due to high levels of COVID infections and an absence of additional federal fiscal support. Some of this weakness will persist into Q1 2021. It appears that negotiations on a new COVID relief package are gaining traction in Congress.

Additionally, two vaccine candidates, which are now under consideration by the FDA for emergency use, provide optimism that a medical resolution to the pandemic will occur in H1 2021, setting the stage for stronger economic growth in the second half of next year.

The commercial real estate recovery will lag that of the broader economy, particularly for the office, retail and hotel sectors. Nevertheless, CBRE expects that a strong economic rebound next year will bring about material improvement in these sectors, although retail and hotels will take more than two years to fully recover.


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